Ann: Senior Executive Restructure, page-41

Secured shipping lenders can only rely on the company guarantee IF the company first defaults on the secured debt facilities AND IF the company doesn't cure the default. It is highly unlikely that the company would be in default of the shipping debt if, for instance, the company paid its shareholders $50m in dividends (because secured debt facilities don't typically have corporate-level covenants - only ship-level covenants).

Check out how well Tishman Speyer played its secured property lenders during the GFC in its ASX-listed Tishman Speyer Office Fund (TSO.ASX). At the depths of the crisis it had about $1 billion in US office buildings (unsellable) and $670m in secured debt 67% LTV). Management made the very intelligent decision to draw down about $100m in debt from its available secured facilities at the height of the GFC and put it aside into a bank account out of the reach of its secured lenders.

This gave the Trust significant negotiating strength in dealing with its secured lenders and plenty of fire power to cure breaches of secured debt if they occurred. It didn't need to.

The investment community in Australia didn't get it. TSO stock got to about 5c while its NAV was about $1.00. Tishman Speyer thwarted an opportunistic takeover bid for TSO (by Madison International)...managed its way through the crisis...and ultimately took the Trust private itself (with a Korean Fund) at about $0.95 per unit.

20-bagger for those who understood.